In the year since two Rancho Santa Fe entrepreneurs announced their "Silicon Border" project, they have broken ground on a huge parcel near Mexicali and forged agreements they say will draw technological development from Asia to North America.

"We have our eyes on closing deals and putting the whole thing together," said D.J. Hill, one of the entrepreneurs. Their aim is to transform Mexicali into the world's next semiconductor manufacturing center.

A major step in making Silicon Border successful has been a commitment of more than $2 million from the Mexican federal and Baja California state governments to the design and marketing of the industrial park.

President Vicente Fox has offered 10 years of tax-free status to any firms that locate in the park and invest $1 billion or more, Hill said.

"They can avoid taxes for over 10 years, maybe forever, if they keep investing in their facility," he said. "That competes if you are investing in China, Taiwan or Malaysia."

A single semiconductor manufacturing plant can cost $1.5 billion or more to build.

About half of the wafer-thin silicon chips that are the brains of computers, cell phones and a host of other products are made in Asia, according to the Semiconductor Industry Association, even though half of the revenue goes to U.S. companies.

The trend is for companies to manufacture in China or Taiwan, said Peter Singer, editor in chief of Semiconductor International magazine.

He said there are many start-from-scratch places, even in the United States, that are trying to create the infrastructure and incentives to attract companies.

"But I think it's a hard sell," Singer said.

Still, Hill argues that Silicon Border can grab a piece of a worldwide semiconductor market valued at about $214 billion.

He and Ron Jones, the project's chief executive, have traveled across Asia talking to high-tech companies doing business there, including firms making high-definition televisions in Baja California.

"We're seriously talking to a handful of companies, and we're in serious negotiations with one," Hill said. "That gives us enough gumption to do the groundbreaking and continue to expand our operations."

The Silicon Border entrepreneurs broke ground June 22 west of Mexicali on one of two parcels, totaling more than 15 square miles.

The value of the land together with other investments so far has totaled nearly half a billion dollars.

The largest plot sits just south of the border near Sempra's new power plant and another new plant built by InterGen, Hill said. Silicon Border's other parcel is a couple miles south of the Sempra plant near a freeway due to be completed by the end of the year.

Proximity to the power plants gives Silicon Border access to the clean electricity needed for semiconductor manufacturing, he said. In the future, however, the entrepreneurs plan to develop a 600-to 700-megawatt power plant dedicated specifically to supplying manufacturers in the high-tech industrial park.

The sites also are near a planned border crossing, Hill said. "We are in high hopes of getting that crossing earlier than in the long-range," he said.

Since announcing the project at last year's high-tech industry SEMICON conference, Hill and Jones have formed partnerships with Ernst & Young to outline tax-saving scenarios through Silicon Border; Austin Commercial, a Texas construction firm that is designing the park to accommodate high-tech operators; and its Mexican partner Maiz-Mier Construction.

Silicon Border also has tapped Octavio Garza, an executive of Sony Electronics Corp.'s Baja California operations, to run a new Silicon Border office being opened at the CETYS University in Mexicali.

The entrepreneurs, along with Mexican Economics Undersecretary Eduardo Solis, plan to reveal these and other actions taken during the past year at a news conference during today's SEMICON events in San Francisco.

Silicon Border is on track to demonstrate that Mexico is capable of moving away from lower-end assembly plants, Hill said.

"This is a better location than (Asia) because it's a lot closer to the engineers who design the products. It's also a lot closer to the end market," he said.

Mexico not only is a partner with the United States in the North American Free Trade agreement and its No. 2 trading partner, but the country also has free trade agreements with 43 other nations. As a result, Hill said, Silicon Border manufacturers would have the ability to buy components and sell their products across international borders at low or zero duty rates. Diane Lindquist: (619) 293-1812; diane.lindquist@uniontrib.com